BOTTOM LINE On TILA Rescission
Update 7/2/2015
Neil Garfield Rescission Litigation 3 days from when 3 years from when 07022015 no show tonight
Rescission Litigation: 3 days from when? 3 years from when?
Posted on July 2, 2015 by Neil Garfield
This wraps things up for the week, and a reminder that there is no show tonight.
I think the following rules should be applied to the letter of rescission. Remember that Congress explicitly stated that borrowers have the right to effectuate rescission with a mere letter. Congress did not state that the lenders could reject the rescission with a letter. They MUST file a legal action alleging whatever defects they wish to assert. Since the rescission is effective by operation of law it is ONLY through operation of law that the rescission could be vacated.
1. Don’t refer to the date of origination. You don’t know when your liability, if any, arose. You only know when you signed papers. Consummation of the loan commences the moment your liability arises and that is a question of fact for the alleged “lender” to allege and prove IF THEY WANT TO. The alleged lender has the option of accepting the rescission and all the reasons they could have attacked the rescission are voluntarily waived. If they don’t get an order vacating the rescission within 20 days of receipt, they have involuntarily accepted the terms of rescission in the TILA statute. Congress explicitly cut off any right of a lender to stonewall the rescission.
2. Don’t offer any reasons for the rescission. You might be putting those reasons in dispute yourself thus raising the question about whether the rescission was proper or warranted.
3. Send it to everyone who was ever claiming a right to collect, own or service the loan.
4. To make sure that they know you are traveling under TILA, you can add that they have 20 days in which to comply with Federal statutes.
5. The Beach v Ocwen decision (1997, Supreme Court) can be used for the borrower since the “lender” was not challenged as to standing to contest the rescission, the 3 years was admitted to have run and the alleged “lender” DID file papers in court to get relief from the rescission, which the court gave them. No allegation appears to have been made as to the running of 20 days and perhaps Great Western actually filed their contest of the rescission within 20 days. Both the State and Federal Court have jurisdiction over TILA federal Questions. But it is important to note that Beach says that the 3 years is not a statute of limitations, it is statute of expiration. So the question becomes whether the lender wishes to use that defense, whether the time has run from “Consummation” and whether consummation has actually occurred between the parties who arguing about it and if so when that point in time was that consummation occurred between the parties identified as borrower and lender.
6. The question of whether the alleged lender has standing, or has good grounds to vacate the rescission are all factual questions that must be alleged in a pleading or complaint and proven at trial or final hearing, with the burden squarely on the party attacking the rescission.
7. The basic thrust is that the rescission is effective by operation of law by mailing a letter from the borrower(s). The ability to counter that by letter from the lender is not in the statute and therefore not available. They must file something in court.
8. During the 20 days running from the date of receipt of the notice the “lender” has the option of accepting the rescission. If they wish to get relief from the rescission, they must file a lawsuit or raise their objections in a pleading in a court of competent jurisdiction — and possibly ask for immediate relief within the 20 days in order not to be in violation of TILA statutes.
For further information please email [email protected] or call 954-495-9867 or 520-405-1688.
This is not a legal opinion on any person’s case. Consult with licensed legal counsel in the jurisdiction in which your property is located.
=====================================
Neil Garfield Rescission Litigation 3 days from when 3 years from when 07022015 no show tonight
Rescission Litigation: 3 days from when? 3 years from when?
Posted on July 2, 2015 by Neil Garfield
This wraps things up for the week, and a reminder that there is no show tonight.
I think the following rules should be applied to the letter of rescission. Remember that Congress explicitly stated that borrowers have the right to effectuate rescission with a mere letter. Congress did not state that the lenders could reject the rescission with a letter. They MUST file a legal action alleging whatever defects they wish to assert. Since the rescission is effective by operation of law it is ONLY through operation of law that the rescission could be vacated.
1. Don’t refer to the date of origination. You don’t know when your liability, if any, arose. You only know when you signed papers. Consummation of the loan commences the moment your liability arises and that is a question of fact for the alleged “lender” to allege and prove IF THEY WANT TO. The alleged lender has the option of accepting the rescission and all the reasons they could have attacked the rescission are voluntarily waived. If they don’t get an order vacating the rescission within 20 days of receipt, they have involuntarily accepted the terms of rescission in the TILA statute. Congress explicitly cut off any right of a lender to stonewall the rescission.
2. Don’t offer any reasons for the rescission. You might be putting those reasons in dispute yourself thus raising the question about whether the rescission was proper or warranted.
3. Send it to everyone who was ever claiming a right to collect, own or service the loan.
4. To make sure that they know you are traveling under TILA, you can add that they have 20 days in which to comply with Federal statutes.
5. The Beach v Ocwen decision (1997, Supreme Court) can be used for the borrower since the “lender” was not challenged as to standing to contest the rescission, the 3 years was admitted to have run and the alleged “lender” DID file papers in court to get relief from the rescission, which the court gave them. No allegation appears to have been made as to the running of 20 days and perhaps Great Western actually filed their contest of the rescission within 20 days. Both the State and Federal Court have jurisdiction over TILA federal Questions. But it is important to note that Beach says that the 3 years is not a statute of limitations, it is statute of expiration. So the question becomes whether the lender wishes to use that defense, whether the time has run from “Consummation” and whether consummation has actually occurred between the parties who arguing about it and if so when that point in time was that consummation occurred between the parties identified as borrower and lender.
6. The question of whether the alleged lender has standing, or has good grounds to vacate the rescission are all factual questions that must be alleged in a pleading or complaint and proven at trial or final hearing, with the burden squarely on the party attacking the rescission.
7. The basic thrust is that the rescission is effective by operation of law by mailing a letter from the borrower(s). The ability to counter that by letter from the lender is not in the statute and therefore not available. They must file something in court.
8. During the 20 days running from the date of receipt of the notice the “lender” has the option of accepting the rescission. If they wish to get relief from the rescission, they must file a lawsuit or raise their objections in a pleading in a court of competent jurisdiction — and possibly ask for immediate relief within the 20 days in order not to be in violation of TILA statutes.
For further information please email [email protected] or call 954-495-9867 or 520-405-1688.
This is not a legal opinion on any person’s case. Consult with licensed legal counsel in the jurisdiction in which your property is located.
=====================================
RESCISSION What will MBS Rating Agencies Do Now? Posted on May 11, 2015 by Neil Garfield
EVEN IF THE TRUST DID BUY LOANS WHAT IS THE VALUE OF THE BONDS IF THE LOANS CAN BE CANCELED AT ANY MOMENT BY THE BORROWER?
This is going to be interesting. When investors realize that the “securitization” of loans, even as designed is contingent upon the power that a borrower has to cancel the loan things are going to change.
Think about it. We know with certainty that the notice of rescission is effective by operation of law when a borrower drops it in the mail.
That means it is the same thing as a contested legal action in which the borrower won the case. Nothing can stop a borrower from dropping a notice of rescission into a mailbox.
We also know that there are two time limitations in TILA rescission. The first is the right of three day rescission where the duties of the “lender” are spelled out. We have seen a multitude of cases in which the “loan” was assigned out before the expiration of the 3 days. So if the borrower wants to cancel the deal, who does he notify? Thanks to Dodd-Frank and the FCPB Rules, notice to anyone in the chain is notice to all.
We also know that there is a three year period in which the borrower can cancel the deal. And we know that there is a common law right of rescission. The rules for enforcing TILA rescission and the rules for enforcing common law rescission are very different. The main difference is that TILA rescission is EFFECTIVE (by operation of law) on the date the notice was sent.
And we know that equitable tolling can extend the three years to many more years than three. (Cassino closing 9/26/2005, Cassino mailed certified rescission 1/30/2015 because he learned in June 2012 his lender was not the lender funding loan from wire transfer funding loan plus he learned in March 2014 that MERS was involved and securitization not disclosed at closing.)
And we know that most REMIC Trusts never were funded, never acquired any loans, never were operational even during the 90 day cutoff period. BUT even if the REMIC trust was funded and purchased the loans, what exactly did they get? The answer is that they received an interest in loans that were underwritten by banks who had no risk in granting the loans. The kicker is that all that “bad” (intentional) underwriting can be undone at the stroke of a pen; and this time it isn’t a Judge or government official that has that power. It is the pen of the borrower that has all that power.
Lastly we know that upon TILA Rescission, the parties in the chain must cough up the canceled promissory note, file a satisfaction of mortgage, and return all monies paid by or on behalf of the borrower. That is a huge liability. Who pays that? Is it the investor because they are now the creditor? Investor appetite for that kind of liability is virtually nil because most of them are stable managed funds (e.g., pension funds that require Triple AAA rated investments). Is it the bank or servicer claiming the right to foreclose or otherwise enforce the note? Banks and servicers won’t like that since they don’t consider themselves the lenders. But under Dodd-Frank, they have trapped themselves. They foreclose and claim all the “benefits” of foreclosure, including deficiency judgments. How can they now say they are not liable for disgorgement required under TILA rescission?
Which brings us to the title of this article. Virtually every loan is subject to a notice of rescission, right or wrong, PLUS the fact that it creates a contingent liability, plus interest, plus attorney fees and maybe treble damages. (Cassino made 63 payments of $1,555 on his $200,000 note at 5 ¾% before Chase unlawfully refused further payments) What investor wants to put money up for an investment that could be canceled anytime by any consumer? What investor wants to put up money for an investment that could create a monstrous liability, relying on the banks to (1) handle the money properly and (2) underwrite and manage the loans properly. There are a lot of “if” in there. And rating agencies don’t like uncertainty. Under such circumstances rating agencies should either give no rating or give a very low rating.
I don’t know whether the US Supreme Court realized that when they handed down the Jesinowski decision they were utterly destroying the value of mortgage backed and related securities. Knowing what we now know, who would want to buy the old ones, much less touch anything new being offered in the MBS market?
Spread the word https://livinglies.wordpress.com/2015/05/11/rescission-what-will-mbs-rating-agencies-do-now/
For further information please call Neil Garfield at 954-495-9867 or 520-405-1688.
==================================
EVEN IF THE TRUST DID BUY LOANS WHAT IS THE VALUE OF THE BONDS IF THE LOANS CAN BE CANCELED AT ANY MOMENT BY THE BORROWER?
This is going to be interesting. When investors realize that the “securitization” of loans, even as designed is contingent upon the power that a borrower has to cancel the loan things are going to change.
Think about it. We know with certainty that the notice of rescission is effective by operation of law when a borrower drops it in the mail.
That means it is the same thing as a contested legal action in which the borrower won the case. Nothing can stop a borrower from dropping a notice of rescission into a mailbox.
We also know that there are two time limitations in TILA rescission. The first is the right of three day rescission where the duties of the “lender” are spelled out. We have seen a multitude of cases in which the “loan” was assigned out before the expiration of the 3 days. So if the borrower wants to cancel the deal, who does he notify? Thanks to Dodd-Frank and the FCPB Rules, notice to anyone in the chain is notice to all.
We also know that there is a three year period in which the borrower can cancel the deal. And we know that there is a common law right of rescission. The rules for enforcing TILA rescission and the rules for enforcing common law rescission are very different. The main difference is that TILA rescission is EFFECTIVE (by operation of law) on the date the notice was sent.
And we know that equitable tolling can extend the three years to many more years than three. (Cassino closing 9/26/2005, Cassino mailed certified rescission 1/30/2015 because he learned in June 2012 his lender was not the lender funding loan from wire transfer funding loan plus he learned in March 2014 that MERS was involved and securitization not disclosed at closing.)
And we know that most REMIC Trusts never were funded, never acquired any loans, never were operational even during the 90 day cutoff period. BUT even if the REMIC trust was funded and purchased the loans, what exactly did they get? The answer is that they received an interest in loans that were underwritten by banks who had no risk in granting the loans. The kicker is that all that “bad” (intentional) underwriting can be undone at the stroke of a pen; and this time it isn’t a Judge or government official that has that power. It is the pen of the borrower that has all that power.
Lastly we know that upon TILA Rescission, the parties in the chain must cough up the canceled promissory note, file a satisfaction of mortgage, and return all monies paid by or on behalf of the borrower. That is a huge liability. Who pays that? Is it the investor because they are now the creditor? Investor appetite for that kind of liability is virtually nil because most of them are stable managed funds (e.g., pension funds that require Triple AAA rated investments). Is it the bank or servicer claiming the right to foreclose or otherwise enforce the note? Banks and servicers won’t like that since they don’t consider themselves the lenders. But under Dodd-Frank, they have trapped themselves. They foreclose and claim all the “benefits” of foreclosure, including deficiency judgments. How can they now say they are not liable for disgorgement required under TILA rescission?
Which brings us to the title of this article. Virtually every loan is subject to a notice of rescission, right or wrong, PLUS the fact that it creates a contingent liability, plus interest, plus attorney fees and maybe treble damages. (Cassino made 63 payments of $1,555 on his $200,000 note at 5 ¾% before Chase unlawfully refused further payments) What investor wants to put money up for an investment that could be canceled anytime by any consumer? What investor wants to put up money for an investment that could create a monstrous liability, relying on the banks to (1) handle the money properly and (2) underwrite and manage the loans properly. There are a lot of “if” in there. And rating agencies don’t like uncertainty. Under such circumstances rating agencies should either give no rating or give a very low rating.
I don’t know whether the US Supreme Court realized that when they handed down the Jesinowski decision they were utterly destroying the value of mortgage backed and related securities. Knowing what we now know, who would want to buy the old ones, much less touch anything new being offered in the MBS market?
Spread the word https://livinglies.wordpress.com/2015/05/11/rescission-what-will-mbs-rating-agencies-do-now/
For further information please call Neil Garfield at 954-495-9867 or 520-405-1688.
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